NSW Land and Housing Corporation v Stannard

[2000] NSWSC 681

Reported Decision: 50 NSWLR 89

New South Wales

Supreme Court

CITATION:

NSW Land and Housing Corporation v Stannard & Anor [2000] NSWSC 681

CURRENT JURISDICTION:

Administrative Law

FILE NUMBER(S):

SC 30087/99

HEARING DATE(S):

28 June 2000

JUDGMENT DATE:

14 July 2000

PARTIES :

New South Wales Land and Housing Corporation
(Plaintiff)

v

Carol Ann Stannard
(First Defendant)

Residential Tribunal
(Second Defendant)

JUDGMENT OF:

Davies AJ

LOWER COURT JURISDICTION :	Residential Tribunal
LOWER COURT FILE NUMBER(S) :	03221/99
LOWER COURT JUDICIAL OFFICER :	Member, K Thane

COUNSEL :	P: Mr J M Atkin 1D: Ms J A Needham 2D: Submitting Appearance
SOLICITORS:	P: Michael Callen 1D: Terrence Anthony Murphy 2D: I V Knight
CATCHWORDS:	Residential Tenancies - whether rent increased - whether notice of increase to tenant - whether notation on rent card a sufficient notice
LEGISLATION CITED:	Residential Tribunal Act 1998, ss 27, 62 Residential Tenancies Act 1987, ss 8-10, 44-46, 130
CASES CITED:	Moses v Lovegrove [1952] 2 QB 533
DECISION:	Dismissed with costs.

IN THE SUPREME COURT
OF NEW SOUTH WALES
ADMINISTRATIVE LAW DIVISION

DAVIES AJ

14 JULY 2000

30087/99 - NEW SOUTH WALES LAND AND HOUSING CORPORATION v Carol Ann STANNARD & ANOR
JUDGMENT

1    HIS HONOUR: This is an appeal brought under s 62 of the Residential Tribunal Act, 1998 from a decision of the Residential Tribunal ("the Tribunal") given on 27 September 1999.

2 The appeal is limited to a question of law. Section 62(2) provides:

(2) If, in proceedings before it, the Tribunal decides a question with respect to a matter of law, a party to the proceedings who is dissatisfied with the decision may appeal to the Supreme Court against the decision.

3    The proceedings before the Tribunal were brought by the present plaintiff, New South Wales Land and Housing Corporation ("the landlord"), against its tenant, Carol Ann Stannard, seeking an order that the tenant pay arrears of rent going back to 14 December 1998. The Tribunal dismissed the claim holding:

"The landlord has failed to demonstrate that the tenant is in breach of her obligation to pay rent in accordance with the residential tenancy agreement. Accordingly, the landlord's application (seeking compliance) is dismissed."

4 That decision was based upon a finding that the rental of $77.00 per week, stipulated by a tenancy agreement between the parties commencing 15 October 1984, had not been increased and that the landlord had not proved that it had increased the rent in accordance with the provisions of s 45(1) of the Residential Tenancies Act, 1987.

5    It is not in dispute that the Residential Tenancies Act applied to the tenancy. Relevant provisions of the Residential Tenancies Act provided, inter alia:

44 . (1) This Division applies to a rent increase even though the amount of the rent increase, or a method for calculating the amount of the increase, is set out in a residential tenancy agreement.

…

45 . (1) The rent payable by a tenant under a residential tenancy agreement shall not be increased except by notice in writing given to the tenant specifying the amount of the increased rent and the day from which the increased rent is payable.

…

(3) A notice of increase of rent given in accordance with this section (and not cancelled by a later notice or affected by any order of the Tribunal) varies the residential tenancy agreement so that the increased rent specified in the notice is payable under the agreement from the day specified in the notice.
…
(5) A rent increase (including a rent increase permitted under subsection (4) or provided for in any other residential tenancy agreement) is not payable by a tenant under a residential tenancy agreement unless the rent is increased in accordance with this section or by an order of the Tribunal.
…
46 A tenant under a residential tenancy agreement may apply to the Tribunal for an order declaring that a rent increase is excessive not later than 30 days:
(a) after being given notice of the rent increase, …
…


130 (1) A notice or other document (other than a notice of termination) required to be given to a tenant under this Act may be given:
(a) by delivering it personally to the tenant or a person apparently of or above the age of 16 years by whom the rent payable by the tenant is ordinarily paid,

…

(d) in such other manner as may be prescribed for the purposes of this section or approved by the Tribunal.

6 It can be seen that s 45 specifies the means by which rents may be increased and gives statutory effect to an increase made in accordance with the section. A rent increase effected otherwise than in accordance with the section has no validity.

7 The matter before the Tribunal proceeded in an informal way, which was consistent with the provisions of s 27 of the Residential Tribunal Act which provides that the Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice, and that it is to act with as little formality as the circumstances of the case permit. Thus, for the convenience of the parties and for the expeditious disposal of the matter, the Tribunal, with the agreement of the parties, directed that the matter would be decided on written submissions. The Tribunal gave directions as to the provision of such submissions and directed that the Tribunal would thereafter determine the matter "on the papers".

8 The written submissions of the landlord showed that there were two elements of the rent which had been paid by the tenant. The first was called the market rent. When the tenancy agreement commenced in October 1984, it fixed the rental at $77.00, which was the market rental for premises at that time. The second element was a discretionary rebate. This rebate varied from time to time according to the financial circumstances of the tenant. Under s 44(2) of the Residential Tenancies Act, an increase in the amount payable by a tenant because of a cancellation or reduction of a rent rebate is not a rent increase for the purposes of ss 45 and 46 of that Act.

9    The landlord's submissions indicated that, on 3 February 1991, the market rent of the premises had been increased to $170.00 per week, although, at the time, the rebated rent continued at $37.10 per week. The issue as to the increase arose when the landlord took proceedings to recover arrears going back to 1998. By that time, the discretionary rebate had been reduced and the rent sought to be recovered was more than $77.00 per week.

10 The landlord's submission said that its tenants were issued with rent cards and that notice in writing, in accordance with s 45(1) of the Residential Tenancies Act, had been given to the tenant by her rent card. The submission said:

"The Department's practice until 31 March, 1994 was that rent details were recorded on rent cards issued to each individual tenant. The practice and procedure was that when making a payment at a Post Office, the tenant produced his or her rent card and at that time the rent details were automatically updated on the card."

11    A copy of a rent card is in evidence. It shows the following headings at the top of the rent card: "Effective from Dates"; "Normal Rent or Monthly Instalment"; "Rent Rebate"; "Rebate Expiry Date"; "Amount Payable" - "Per Week", "Monthly Instalments". The normal or market rent, the rent rebate and the net amount payable per week or monthly were set out under those headings. The relevant date for each change was set out under the first heading. The remainder of the rent card contained provision for forty payments, details of which were entered in under the headings "Date", "Amount", "Reference No." and "Balance".

12    The landlord's submissions went on to state:

"The Department submits that it has complied with Section 45 of the Residential Tenancies Act, 1987. The card system is a notice within the meaning of Section 45(1), - it is written, it gives the tenant notice of market rent and the dates from which market rent is payable. The card complies with the Act in that it is personally given to the tenant after payment of rent at the respective time.
In this instance the Department's records indicate that cash payments were made by the respondent on 18 January 1991 and 1 February 1991 - annexure D hereto. The Department submits, in accordance with the system above referred to, that the rental card was updated at payment showing the market rent increasing as from 3 February 1991 to $170.00 per week."

13    That last paragraph referred to an annexure which recorded the debits and credits made to the tenant's account in early 1991. This record showed that the tenant made a payment of rent on 18 January 1991 and another on 1 February 1991. The effect of the landlord's submissions was that, had the Department's practice applied in the case of this tenant, then the tenant's rent card would have been updated on 18 January 1991 to show the increase in rent on 3 February 1991 and that that increase would have been apparent to the tenant from her rent card on and from that day.

14    The submissions went to allege that, at the proceedings on 7 April 1999 and on 27 July 1999, the tenant had produced rent cards from that era which in fact showed the market rent to be $170.00 per week.

15    The crux of the tenant's submissions was recorded in the following paragraphs:

"The Department provides no evidence that the tenant was given such an update nor have they provided an actual copy of the rent card in relation to Carol Stannard at 5 Leanne Close Niagara Park.
…
I submit this practice and procedure does not comply with Section 45 (1) and that this card system should be seen as an invalid notice as any purported increases, in fact, could be retrospective, depending when the tenant actually visited a Post Office."

16    The Tribunal agreed with the tenant's submissions. The crux of the Tribunal's findings appears in the following reasons:

"The Department claims that section 45 of the Act has been complied with by virtue of the rent card system, which operated until 31 March 1994. This is one of the arguments raised in Department of Housing v Peter Sandman (RTT 98/31818) in almost identical terms.
In that application Member Ms K Thane said:
'Since the landlord has been unable to produce the actual card which relates to this tenancy it is impossible to tell whether the increase (or increases) were recorded in the actual card or not. It is also impossible to tell whether there were any increases implemented at all, since the landlord is unable to advise of the dates that any increase may have taken effect. Even if they were and the Tribunal was to accept that the rent payable and the effective dates were recorded in accordance with DOH practice, the Tribunal still cannot be satisfied that section 45 has been complied with.
This is because at all times the card was intended to be in the possession of the tenant and it was not until the tenant chose to produce the card that it was updated by the landlord. There is therefore no way of knowing whether the tenant was advised of any rent increases and the dates which they apply before any one increase was to take effect.'
The same argument applies to the current application and for this reason the Tribunal has reached the same conclusion.
In the present application, the Department claims that 'there has been no evidence provided by the respondent in relation to notice in arrears [retrospective advice] being given of rent increases'. This is despite the fact that the respondent has said quite clearly 'the Department of Housing had neglected to inform the tenant at any time of an increase in market rent'.
Nevertheless, it is the Department and not the tenant who has the onus of proof. The Department therefore must show that the tenant has been given notice of any increase in the market rent.
The Tribunal finds (as it did in Sandeman ) that Section 45 means that the landlord must advise the tenant (1) of the amount of the increased rent and (2) of the date from which it is payable before the rent is actually increased."

17    The Tribunal concluded:

"In the present application, the Department has demonstrated that it is entitled to a market rental of $77.00 per week. This is the amount that was agreed to under the original residential tenancy agreement dated 12 October 1984. The Department claims that the market rent increased to $160.00 at some time and later to $170.00 in 1991. The Department has failed to produce any evidence demonstrating that the tenant was given prior notice of any increase in the market rent."

18 It is clear that the Tribunal was of the view that, even if the rent payable and the effective date had been recorded on the tenant's rent card in accordance with the landlord's practice, the Tribunal could not be satisfied that s 45(1) had been complied with.

19 The first question, therefore, is whether such an entry on the tenant's rent card would have been, in the terms of s 45(3), "A notice of increase of rent given in accordance with this section". I have adopted the words of s 45(3) because that is the provision which gives statutory effect to the notice. The question is whether the entry on the tenant's rent card, assuming it to have been made, would have been such a notice.

20    The rent card had a character similar to a tenant's rent book. Such a book was described by Evershed M.R. in Moses v Lovegrove [1952] 2 QB 533 at 536 in these terms:

"The rent book is, I think, what it purports to be, and what it is called, a rent book, that is, a book containing acknowledgments for payment of weekly sums of rent, and containing also, in pursuance of the terms of the legislation, a reference to the conditions on which the tenant was holding his tenancy. I think that on the face of it, it was not intended to be, and is not a contract for granting a tenancy, still less a lease creating an estate. It is, I think, at most what it was intended to be, and what it is on the face of it called, a book evidencing the terms on which the tenant held."

I have set out this passage because it emphasises the difference in function between a rent book which evidences rights and obligations and a document which creates rights and obligations.

21    The use of the indefinite article "A" in s 45(3) makes it clear that it will not be sufficient that the tenant has received notice of the increased rent. What is required is a document which satisfies the description of "A notice" in writing. A document will not have that character unless, on its face, it purports to give and effectively gives notice of the relevant fact. In my opinion, the rent cards on which the landlord relies were a record of events. They did not purport to be notices and they did not give notice. This seems to be the view which the Tribunal took of the rent cards when the Tribunal pointed out that it could be a matter of chance whether the rent card was updated during the three week period between the time the landlord put the increased rent into its computer and the date on which the landlord intended the increased rent to commence.

22 I understand the arguments which may be put to the contrary. There are reasons for not giving s 45 an unduly technical reading. The Residential Tenancies Act applies generally to the residential tenancies in New South Wales. Such tenancies are not statutory tenancies, although ss 8, 9 and 10 of the Act regulate the terms which may be found in a tenancy agreement. In this context, one would not expect undue technicality. Moreover, s 45(1) provides for notice in writing, not for a notice in a prescribed form, and the term "given to", not the term "served on", is used. Notwithstanding those considerations, I am of the view that the landlord did not give a notice of increase of rent to the tenant. The entry in the rent card was a record of the increase but was not a notice, which by the operation of s 45 created the increase.

23 In the circumstances, I consider that the Tribunal was not in error in law in concluding that the provisions of s 45(1) were not satisfied. Although the tenant may have had prior notice from her rent card that the rent was to increase to $170.00 from 3 February 1991, the landlord, nevertheless, did not give her a notice in writing to that effect.

24 Had I formed the view that the Tribunal erred in the interpretation of s 45, I would have remitted the matter to the Tribunal to determine what the facts of the particular case had been. The Tribunal did not discuss in detail the facts on which the landlord relied and did not determine whether the tenant was made aware through her rent card, prior to 3 February 1991, that her rent was to be increased to $170.00 per week. The Tribunal's reference to onus of proof would not have been a sufficient answer to the landlord's case, had the landlord's interpretation of s 45 been correct.

25 I need not discuss the issue raised by the summons as to whether or not, in the case of the New South Wales Land and Housing Corporation which was exempt from the operation of s 45(2), a relevant notice could be retrospective. It would seem to follow from the interpretation which I have given to s 45 that the notice could not be retrospective. However, the issue does not arise in the present case and it would be inappropriate to rule on it.

26    Another issue raised in the summons was whether a letter sent to the tenant, on 21 May 1998, was a relevant notice in writing. This issue was not raised before the Tribunal and it was not pursued in the appeal.

27    No issue of waiver or estoppel on the tenant's part has been raised.

28 The end result of this case does not accord with my innate feeling of justice. It would seem that the tenant has been aware, since February 1991, that her rent was $170.00 per week less the rebate and has remained in possession and paid rent on that basis during the ensuing years. It seems unfair to the landlord that, when in 1999 it sought to recover arrears going back to December 1998, it should be met by a defence that a notice of increase was not given in accordance with s 45 of the Residential Tenancies Act. However, I have dealt with the issues in the case and am of the view that, as a matter of law, the landlord's appeal must be dismissed.

29    The order will be that the application to the Court be dismissed with costs.

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Last Modified: 09/26/2000